Kroll Bond Rating Agency Assigns Preliminary Ratings to COMM 2014-277P

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Kroll Bond Rating Agency, Inc. (KBRA) is pleased to announce the assignment of preliminary ratings to five classes of COMM 2014-277P, a $750.0 million CMBS large loan fixed-rate transaction (see ratings list below).

The collateral for the securitization consists of a single, non-recourse, first lien mortgage loan that is secured by the borrower’s fee simple interest in 1.8 million square feet (sf) of 277 Park Avenue. The property is a 51-story, Class A, office building on the entire block bound by Park Avenue, Lexington Avenue, East 47th Street and East 48th Street, in the Manhattan borough of New York City, New York. The property consists of 1.7 million sf of office space, 49,972 sf of retail space, 8,022 sf of parking space, 11,045 sf of management office space and 2,301 sf of communications and storage space. The property was built by the sponsor in 1963. As of July 2014, the property was 98.0% leased, primarily to financial services firms. The two largest tenants at the property are JPMorgan Chase & Co. (69.0% of base rent) and Sumitomo Mitsui Banking Corporation (11.3%). There are five High Quality Credit Worthy Tenants (HQCWTs), inclusive of the top two tenants, which collectively account for 86.2% of total base rent. The property’s in-place rents are 20.5% below the appraiser’s concluded market rents and the property was re-measured from 1.8 million sf to approximately 2.0 million sf. The below market rent and the re-measured sf provides the potential for increased revenue as leases roll, which should have a positive impact on an already strong debt service coverage ratio. However, KBRA generally did not consider the potential rent increases in its cash flow analysis. The building operates subject to a condominium regime that is solely owned and controlled by the borrower, a wholly owned subsidiary of The Estate of Stanley Stahl, the loan sponsor.

KBRA’s analysis of the transaction included a detailed evaluation of the properties’ cash flow using our CMBS Property Evaluation Guidelines, and the application of our CMBS Single Borrower and Large Loan Rating Methodology. The results of our analysis yielded a KBRA net cash flow (KNCF) of $73.8 million. To value the property, we applied a 6.75% capitalization rate to arrive at the resulting KBRA value of $1.1 billion and our KBRA Loan to Value (KLTV) was 68.6%. In our analysis of the transaction, we also reviewed and considered third party engineering, environmental and appraisal reports; our own on-site inspection of the properties and its competitors; and legal documentation.

For further details on KBRA’s analysis, please see our Pre-Sale Report, entitled COMM 2014-277P, which was published today at

The preliminary ratings are based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of final ratings that differ from the preliminary ratings.

Preliminary Ratings Assigned: COMM 2014-277P

Class           Expected Rating           Balance (USD)           Rating Action
A           AAA(sf)           $570,000,000           Preliminary
X-A           AAA(sf)           $570,000,0001           Preliminary
B           AA-(sf)           $84,000,000           Preliminary
C           A(sf)           $68,000,000           Preliminary
D           A-(sf)           $28,000,000           Preliminary

1 Notional balance

17g-7 Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found at

Related Publications: (available at

CMBS Property Evaluation Guidelines, published February 23, 2012

CMBS Single Borrower and Large Loan Rating Methodology, published June 10, 2011

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Kroll Bond Rating Agency, Inc.
Aleksandra Simanovsky, 646-731-2434
Dayna Volpe, 646-731-2391
Keith Kockenmeister, 646-731-2349
Darrick Antell, 646-731-2338
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